Yesterday I mentioned the importance of pricing to e-book sales, using the example of a 1992 novel that shot to the top of e-bestseller lists after going on sale for 99 cents. However, 99 cents is not always the right answer.

Publishers Weekly has a post looking at ten pricing rules that Vook has come up with after studying what elements make e-books and apps successful. Vook determined that it was not simply a matter of price, but also category.

Proper categorization helps books get discovered and in turn contributes to what Vook calls "lift effects." Lift effects are things that raise them to prominent shelf positions and keep titles there with high purchase rates. According to [Vook head of operations and finance Greg] Bateman, to help titles gain traction, publishers should keep the launch price as low as possible for a period ranging from three days to two weeks before raising the price to a more appropriate level.

Vook experimented with variable pricing on 40 e-books and 20 apps over a three month period to determine the right price points, and came up with the following rules:

Vook’s 10 Rules of Pricing

1 Zero variable cost means it’s okay to significantly lower prices to maximize revenue.
2 Optimal pricing is highly content specific.
3 Certain pricing thresholds trigger psychological "automatic" purchases.
4 Categorization plays a large role in optimal pricing and discoverability.
5 Merchandising whole catalogues is more effective than single titles: "a rising tide lifts all boats."
6 Containers are critical to driving upsell in app environment.
7 Lift effects through savvy launch promotions have a profound impact on sales.
8 In general, apps cannot support as high price points as e-books.
9 Real-time sales tracking is necessary to adjust pricing in a dynamic e-book world.
10 For each retailer there are distinct best practices to maximize discoverability and revenues.

Some of those rules are certainly already well known. For example, Valve regularly lowers prices, sometimes to insanely low levels, on electronically-delivered games—and sells them in huge quantities, making a lot of revenue for game companies that don’t have to pay manufacturing and shipping costs. Others are more interesting: people are willing to pay more for books than apps? I would have expected it to be the other way around.

It’s good to see pricing studies that come up with these sorts of axioms. It remains to be seen, however, whether the agency six are willing to put them into practice.


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